Brent Trades Near Four-Month Low Before Economic Data; WTI Holds

Aug. 4 (Bloomberg) -- Brent crude traded near the lowest price in four months before economic data from the U.S., the world’s biggest oil consumer. West Texas Intermediate held near a six-month low.

Futures were little changed in London and New York today after declining last week. The Markit Economics purchasing managers index for U.S. services is due tomorrow, while factory order data is also scheduled this week. In Iraq, militants seized control of two oil fields and some predominantly Kurdish towns in the north after clashes, according to Northern Oil Co.

“Though geopolitical factors show no signs of improvement, markets seem to be turning to economic data and the supply- demand situation for direction,” Michael Poulsen, an analyst at Global Risk Management Ltd. in Middlefart, Denmark, said in a report. The U.S. data “could cause some volatility.”

Brent for September settlement rose 13 cents, or 0.1 percent, to $104.97 a barrel on the London-based ICE Futures Europe exchange as of 9:18 a.m. local time. It slipped 1.1 percent to $104.84 on Aug. 1, the lowest settlement since April 2. The European benchmark crude was at a premium of $6.84 to WTI, compared with $6.96 on Aug. 1.

WTI for September delivery was at $98.10 a barrel in electronic trading on the New York Mercantile Exchange, up 22 cents. The contract slid 0.3 percent to $97.88 on Aug. 1, the lowest close since Feb. 6. The volume of all futures traded was about 13 percent below the 100-day average. Prices are down 0.3 percent this year.

Fuel Demand

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies rose to the highest level in four months as average consumption of the fuel dropped to the lowest since May, even after the country’s peak driving season started with the Memorial Day holiday on May 26.

Markit’s final reading of a gauge for U.S. services is projected to be 60.8 in July, down from 61 in June, according to a Bloomberg News survey. Factory orders probably rose to 0.6 percent in June, a separate survey shows.

Hedge funds and other money managers trimmed their bullish bets on WTI, extending the drop from this year’s peak in June to 22 percent, U.S. Commodity Futures Trading Commission data show. Net-long positions fell 1,375 to 276,741 futures and options combined in the week ended July 29, according to the CFTC.

Mideast Unrest

In Iraq, the Ain Zala and Batma oil fields are under full control of Islamic State, a breakaway al-Qaeda group, according to the state-run Northern Oil Co. The fields have a combined output of 30,000 barrels a day. The Sunni Islamist militants last month occupied the Qayyara field north of Baghdad.

Fighting has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the second-largest producer in the Organization of Petroleum Exporting Countries, pumping 3 million barrels a day in July.

In Libya, Britain dispatched naval vessels to evacuate its citizens as an additional 22 people were killed as a result of militia feuds near Tripoli’s international airport. The nation holds Africa’s biggest oil reserves.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Bruce Stanley, Rachel Graham